Archives for December 2012

December 2012 - Page 13 of 17 - Money Morning - Only the News You Can Profit From

The Federal Reserve Is Socialism's Insidious Tool

If you think for one second that the Federal Reserve System is a Godsend that backstops America's banks and our economy in times of trouble, you'd be right for that one second.

But if you take any time to learn how the Fed really works and in whose interest they operate, you'd make yourself sick for a long, long time.

The truth about the Federal Reserve is that it's a dangerous, insidious socialist tool.

Rather than allowing free markets to function as a "clearing mechanism" that rewards success and punishes failure, the Fed fosters underdevelopment of third-world nations, props up corrupt governments, protects the greedy, self-serving banking constituency it serves, and by design promotes socialism to further its mandate to enrich its masters.

I'm sick of the Fed and their control over the U.S. Congress, the American economy, and the world order.

It's about time the American public revolted against the Fed and our pandering Congressmen who pimp for it, abrogated their Constitutional duties to it, and get rich off it, all the while pretending they control it and it's some kind of Constitutional safeguard.

The Untold Story About The Federal Reserve

You see, the Fed was the brainchild of a bunch of the world's most powerful bankers and a few greedy U.S. Congressmen who were not surprisingly in the employ of banker backers.

The history of the Fed is a fascinating story about American politics and power-broking bankers.

The undisputed truth about the creation and mandate of the Federal Reserve System is laid bare, beautifully I might add, in G. Edward Griffin's The Creature from Jekyll Island.

I thought I knew a lot about the Fed, and it turns out I do. But there is so much more that I didn't know, and it's all laid out in the book, with all the accompanying references and proof.

It chilled me to my very core…

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Investing in Gold: What to Expect from Prices Before 2013

It's been a down week for gold prices, reaching one-month lows, but on Thursday, things began to turn around for the precious metal.

Due to short-covering in anticipation of Friday's employment numbers and comments from European Central Bank (ECB) President Mario Draghi raising expectations for an interest rate cut, Comex February gold rose $8 an ounce to $1,701.80.

Gold exchange-traded funds (ETFs) also had a good day on Thursday as they hit record highs of 76.133 million ounces.

Peter Spina, president of Goldseek.com said to Investor's Business Daily of Thursday's levels, "If gold does remain around these levels for the near term (several months), this remains a very healthy gold market, which will set the tone for the next move up."

After the November U.S. jobs report, which had been expected to be skewed from Superstorm Sandy, came out better-than-expected on Friday, gold went above $1,700 again. Expectations for Federal Open Market Committee (FOMC) easing fell a bit.

Until the Dec. 10 and Dec. 11 FOMC meeting ends, investors are expected to hit the sidelines.

At next week's meeting, FOMC members will decide what to do with "Operation Twist" as it comes to an end. Many think they will extend it, plus implement a "QE4."

This would be good for the precious metals markets. But gold prices are affected by much more than the FOMC.

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What the Fiscal Cliff Means for Investors

Beyond the rhetoric and posturing in Washington, what does the fiscal cliff mean for investors?

The phrase is usually accompanied by dire warnings about what will happen to the nation's economy if the country fails to avert the fiscal cliff.

Even talk about a possible compromise has sent shivers up investors' spines.

One compromise would cap the tax exemption on municipal bonds – a tax break in effect since 1913. That has sent investors in that segment of the bond market scurrying for cover.

The compromise would also raise borrowing costs for municipalities.

As Mike Nicholas, CEO of the Bond Dealers of America, told CNBC, "It's a tax on everyone."

Another more likely part of any compromise would involve raising the capital gains tax rate from the current 15% to perhaps 25% or more.

That prospect affected many high-flying stocks, including Apple Inc. (Nasdaq: AAPL), in which investors have large capital gains. Investors are selling Apple and other stocks before year's end to lock in the lower capital gains tax rate.

Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank in San Francisco, told Reuters, "You're going to see selling in the likes of Apple and other companies that have had good runs."

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Risky Dividend-Paying Stocks to Avoid

Investors have had to endure a lot of turbulence and volatility this year, but it's been a very good year for those who invest in dividend-paying stocks.

In the third quarter, dividend increases by U.S. companies amounted to $8.8 billion, according to S&P Dow Jones Indices.

During the quarter, there were nearly 440 dividend increases, up more than 25% from the third quarter of 2011.

Companies that aren't in the S&P 500 also are among those sharing the wealth. The percentage of non-S&P 500 common issues paying a dividend again increased, to 43.4% in the third quarter from 42.7% in the second quarter, 41.7% in the first quarter and 41.4% at the end of the fourth quarter of 2011.

Even with all the positive news for dividend-paying stocks, there are some that are best avoided. Here are a few to keep out of your portfolio.

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How to Buy Gold: Don't Miss the Yellow Metal's Next Move Up

With experts predicting rising gold prices for at least the next year, it's no surprise that more and more investors want to know how to buy gold.

According to the facts and figures cited last week by Money Morning Global Resources Specialist Peter Krauth, 2013 should be a banner year for gold. Krauth projects prices for the primary precious metal could easily climb from the current $1,704 an ounce to $2,200 – or even more – a one-year gain in excess of 25%.

That means every serious investor should have at least some gold in their portfolio.

That raises two immediate questions:
1) What are the best vehicles for investing in gold; and,
2) What are the best ways to buy the yellow metal?

For each investor, the best approach to how to buy gold depends on your goals and expectations.

How to Buy Gold

If you're worried global political and economic tensions will intensify, then holding the actual physical metal is your best choice.

Possible flash points include strife in the Middle East, a meltdown in the Eurozone debt crisis, a continued slowing of China's growth rate and, of course, the U.S. fiscal cliff crisis, which could plunge America and perhaps the world economy back into recession – or worse.

Under such conditions, purists feel holding physical gold provides the only truly effective hedge against almost certain declines in the value of the dollar and other fiat currencies – declines that could be amplified by sharp reversals in global financial markets.

For smaller investors, how to buy gold in physical form typically means buying gold bullion bars, rounds (unadorned coin-shaped pieces) or minted gold bullion coins.

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How to Choose the Best Global Value Stocks to Buy

It's no surprise investors are having a hard time finding strong stocks to buy.

After all, nobody's getting too excited about the recent rally. Europe is about to implode, Japan's in a coma, China's suffering a slowdown and the United States faces the possible fiscal cliff.

That's why I was talking to fund manager George Fraise of SGA Global Growth (MUTF: SGAGX) the other day, to find out where the growth – and potential for profit – is in the global market.

Fraise said he's very bullish on global value stocks, and outlined his strategy for picking the right ones.

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Take a Closer Look Before Cheering the November U.S. Jobs Report

The Department of Labor today (Friday) released the November U.S. jobs report, which showed the U.S. economy added 146,000 jobs last month, handily beating most economists' expectations.

The addition pushed the unemployment rate down from an unhealthy 7.9% to a still elevated 7.7%. That is the lowest level in four years, since December 2008.

Projections for the unemployment level ranged for it hold steady at 7.9% or rise to up to 8.1%.

But the reasons for the drop aren't as encouraging as the lowered rate itself.

The Real Story of the November U.S. Jobs Report

The reason behind the surprising drop was because more dejected workers simply left the labor force. Some 350,000 people, unable to find work and no longer looking for a job, have dropped off the radar and were not counted among the slew of individuals still out of work.

The labor participation rate fell 20 basis points to 63.6%. Without this drop in the labor force, the unemployment rate would have remained at 7.9%.

Three years after the end of the 2007-2009 recession, the labor force participation rate remains extremely weak. If the rate reflected normal levels, the unemployment rate would be considerably higher.

Also contributing to the unexpected uptick was early seasonal retail hiring, instead of long-term sustainable positions. Retail was a key jobs producer in November, adding 53,000 to payrolls.

That's partly due to Thanksgiving being earlier this year than usual. Plus, more stores kicked-off the holiday shopping spree much before the usual Black Friday start.

These factors "suggest an asterisk will have to be put alongside the monthly non-farm report," Bloomberg senior economist Joseph Brusuelas wrote in today's Bloomberg Economics Brief.

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Bear of the Day: ArcelorMittal (MT) - Bear of the Day

We are retaining our Underperform recommendation on ArcelorMittal (MT) following its dismal third-quarter 2012 results. It turned to a loss in the quarter, hurt by weak economic conditions and lower steel pricing. Both revenues and adjusted loss per share missed the Zacks Consensus Estimates. The company announced its plans to cut its annual dividend. ArcelorMittal […]

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The Fiscal Cliff Is Set To Clobber The Middle Class With Nearly 50% Tax Rates

If I didn't know any better, I'd think there's a small but growing group of people in Washington who think it would actually be good if we temporarily went over the fiscal cliff.

I say that because I am seeing a smattering of articles recently suggesting that somehow going over the cliff "won't be all that bad" or that we're "really just talking about cuts that need to happen in the first place."

President Obama seems to think the same way judging by the fact that he's dug in his heels, telling the GOP there will be no fiscal cliff bargain that doesn't include tax hikes.

Now noted budget hawk Republican Senator Tom Coburn has broken ranks, noting that he'd rather see rates rise because that "will give us a greater chance to reform the tax code and broaden the base in the future."

I find that to be an absolutely appalling argument given how much further the president's proposals will squeeze the middle class.

As Fox Business Network's Gerri Willis, an expert on consumer and personal finance issues, recently pointed out to me, the average middle class tax rate is already 43.12%, according to the non-partisan Tax Foundation.

Beyond that, Willis says if we do go over the cliff, the average middle class tax burden jumps to nearly 50%.

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